Addressing threats to health care's core values, especially those stemming from concentration and abuse of power. Advocating for accountability, integrity, transparency, honesty and ethics in leadership and governance of health care.

Friday, January 11, 2013

Pfizer's Pfourteenth Settlement - a Small Reminder of Continuing Impunity

Well, that did not take long. Less than a month after its last legal settlements were announced, Pfizer had to settle again.

The Details of the Settlement

This case, involving charges filed by the Texas Attorney General, was only reported locally, e.g., here in the Houston Business Journal:

The state of Texas will receive more than $36 million from two civil Medicaid fraud settlements with Pfizer Inc and Endo Pharmaceuticals, Attorney General Greg Abbott said Friday.

Both companies will pay $18.17 million to the state, plus attorney
fees and relator shares. The federal government is also entitled to a
share of the total settlement, Abbott’s statement said.

As usual, the settlement was about deceptions:

State and federal law requires drug companies disclose to the Medicaid
program the prices they charge pharmacies, wholesalers and distributors
for their products. Texas’ lawsuits claimed the companies misreported
the price of various generic drugs and overcharged Medicaid for certain
products.

As usual, Pfizer had excuses:

In the Pfizer settlement, the state’s investigation originally
targeted entities that are now wholly owned subsidiaries of Pfizer.

In making the settlements, neither company is admitting to any wrongdoing.

New York-based Pfizer released a statement saying the safety of its
subsidiaries’ products was not an issue of the investigation and Pfizer
was not a target or subject of the case.

'Pfizer’s subsidiaries are resolving this investigation to avoid the
further time and cost of litigation,' the company said in its statement. 'The majority of the Texas investigation focused on reporting that took
place prior to the subsidiaries being acquired by Pfizer. The company
remains committed to providing accurate pricing information to the Texas
Medicaid program and providing quality pharmaceutical products to the
citizens of Texas.'

Of course, Pfizer acquired the companies (which were listed in the settlement document as ESI Lederle, Lederle Labs, and Pharmacia) in order to make money from them. Furthermore, in acquiring the subsidiaries, Pfizer assumed responsibility for them and their actions.

As usual, there was no hint in the minimalist coverage of this settlement of any sort of negative consequences for anyone who authorized, directed, or implemented the relevant behavior, which did involve deception upon the government of Texas.

Nobody Held Responsible, Even After 14 Settlements

As is also usual, there was no mention in the media coverage, or the settlement document that Pfizer has made numerous other settlements in the recent past. By my best count, the total was up to thirteen from the beginning of the 21st century to the present, as most recently tabulated here, and listed in the Appendix below. (There may easily have been more that I missed.)

At the time of the twelfth and thirteenth settlements, we wondered whether the sheer volume of documentation of Pfizer's actions, and the sheer number of legal actions against it would finally lead to the end of the impunity of Pfizer's leaders. After all, one would think that if the town drunk showed up in court for his fourteenth drunk driving charge, the book would be figuratively thrown at him. Instead, at best, Pfizer had a wet noodle thrown at it. The costs of this settlement, and even the cumulative costs of all the previous ones over time just added up to costs of doing business. And these costs were not paid by the people who profited the most from the bad behavior, but were diffused among all stock-holders, employees, patients, and payers.

Of course, leadership and governance of Pfizer is by some very fancy people indeed, and our society has not been good lately at holding such fancy people to any standards whatsoever.

The sorts of practices discussed in Pfizer's multiple settlements have added to the revenue that have helped a lot of people live in the style to which they have become accustomed. Pfizer has had some very, very well paid executives. In 2011, according to the company's 2012 proxy statement, its CEO, Ian Read, got more than $25 million, that is to repeat more than twenty-five million dollars, count them, in total compensation. All the rest of its named executive officers got more than $5 million in total compensation. That 2012 report justified this other worldly munificence in part because

We continued to improve our reputation in society through engagement with our customers, our shareholders, and the investor community.

Really, after now 14 settlements?

The issue of the impunity of leaders of large organizations has finally made it to the big time. For example, a New York Times editorial called the latest US government settlement with the large banks whose exploitative mortgage practices helped to usher in the global financial collapse or great recession "another slap on the wrist." Writ large, continuing impunity is the sort of problem that indicates a degree of societal corruption that can destroy particular civilizations.

I am just a simple country doctor and can only do my small part to keep the barbarians outside the gate, but at least those who care about what has gone wrong with health care ought to be calling for vigorous, impartial law enforcement that holds leaders of health care organizations accountable for wrong-doing, and in general, changes that make leaders of health care organizations broadly accountable for their actions.

There are some luminaries from health care and academia on the current Pfizer board, like Dennis A. Ausiello, M.D.,
Jackson Professor of Clinical Medicine at Harvard Medical School and Chief of Medicine at Massachusetts General Hospital; Frances D. Fergusson, Ph.D., President Emeritus of Vassar College; Helen H. Hobbs, M.D., Investigator of the Howard Hughes Medical Institute since 2002, is a
Professor of Internal Medicine and Molecular Genetics and Director of
the McDermott Center for Human Growth and Development at the University
of Texas (UT) Southwestern Medical Center; and Marc Tessier-Lavigne, Ph.D., President of The Rockefeller University since March 2011. Maybe some people at their base institutions ought to be asking them about Pfizer's multiple ethical lapses and what they are doing to make its leadership more accountable.

October 2002: Pfizer and
subsidiaries Warner-Lambert and Parke-Davis agreed to pay $49 million to
settle allegations that the company fraudulently avoided paying fully
rebates owed to the state and federal governments under the national
Medicaid Rebate program for the cholesterol-lowering drug Lipitor.

May 2004: Pfizer agreed to pay
$430 million to settle DOJ claims involving the off-label promotion of
the epilepsy drug Neurontin by subsidiary Warner-Lambert. The promotions
included flying doctors to lavish resorts and paying them hefty
speakers' fees to tout the drug. The company said the activity took
place years before it bought Warner-Lambert in 2000.

April 2007: Pfizer agreed to
pay $34.7 million in fines to settle Department of Justice allegations
that it improperly promoted the human growth hormone product Genotropin.
The drugmaker's Pharmacia & Upjohn Co. subsidiary pleaded guilty to
offering a kickback to a pharmacy-benefits manager to sell more of the
drug.

Thereafter, Pfizer paid a
$2.3 billion settlement in 2009 of civil and criminal allegations and a
Pfizer subsidiary entered a guilty plea to charges it violated federal
law regarding its marketing of Bextra (see post here).
Pfizer was involved in two other major cases from then to early 2010,
including one in which a jury found the company guilty of violating the
RICO (racketeer-influenced corrupt organization) statute (see post here). The company was listed as one of the pharmaceutical "big four" companies in terms of defrauding the government (see post here). Pfizer's Pharmacia subsidiary settled allegations that it inflated drugs costs paid by New York in early 2011 (see post here).
In March, 2011, a settlement was announced in a long-running class
action case which involved allegations that another Pfizer subsidiary
had exposed many people to asbestos (see this story in Bloomberg). In October, 2011, Pfizer settled allegations that it illegally marketed bladder control drug Detrol (see this post).
Finally, in August, 2012, Pfizer settled allegations that its
subsidiaries bribed foreign (that is, with respect to the US) government
officials, including government-employed doctors (see this post).

In December, 2012, Pfizer settled federal charges that its Wyeth subsidiary deceptively marketed the proton pump inhibitor drug Protonix, using systematic efforts to deceive approved by top management, and settled charges by multiple states' Attorneys' General that it deceptively marketed Zyvox and Lyrica (see this post).

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